This talk was given at Digital Health Nordic 2018 (digihealthnordic.com)
A video of the live presentation is available here
The hype words of today are digitalization and digital transformation. What do they actually mean? Simply put, they are the process of technologically-induced change within an industry. Not just going paperless or automating, but rethinking some or all of the business in digital terms. Estimates have been made that 70-80% of companies will fail at digital transformation. Thus, it’s not only the social and healthcare sector that is struggling, but with the dependency ratio developing the way it is, we just can’t afford 80% of you failing. Without significant reformation and successful digital transformation we simply can’t uphold the welfare system as we know it – we’d run out of resources.
Why then is the digitalization of social and healthcare services struggling to take off in Finland?
Not enough incentives to develop and transform
So far there have not been enough incentives to develop and transform. The public sector has been working hard to keep up with the ever-increasing demand for services. Public sector specialized care is top class even on a global level, also in terms of digitalization. But as a whole the public sector is facing difficulties to develop. It’s no easy task to transform under such pressure and with rather limited options for funding. Many of the development attempts have been funded by outside parties. Unfortunately, often times these attempts have failed to continue after the outside funding has ceased. Perhaps due to a lack of true ownership or a lack of motivation to transform. Increased competition and transparency will bring more incentives and motivation.
The same has been evident with regards to the third sector, which has a significant role providing services that the public sector lacks resources in: preventing alienation, aiding mental health and substance abuse patients, providing peer support, etc. This sector needs a lot of development, especially in terms of interoperability with the public and private sectors.
The private sector has put much of its development efforts into further improving its competitive edge – fast and easy access to care. New challenges lie ahead now as revenue models change from fee for service to more value-based models with pressure from both national reform and the insurance industry newcomers.
Leaders have focused on control
In the social and healthcare sector the focus of leadership has traditionally been focused on control. This industry has a long tradition in a culture of hierarchy, control and fixed procedures. This is in many ways a sub-optimal culture to drive innovation in a fast changing environment. Neither does it particularly aid in keeping customer needs at the core of all development.
The need for control feeds on the fear of failure. Failure in politics is considered disastrous, so is failure in the IT field. And some kinds of failure are more acceptable than others. As the saying has been: you won’t get fired for selecting IBM or Microsoft. The fact is, we need the courage to try new approaches, new kinds of services and ways to create value.
We best not follow the road of Kodak, that failed because it missed out on digital photography and all the software, file sharing and third party apps that go along with it. Thus we need faster ways to develop new value adding services and models. I’ve often talked about the need for creating internal startups, business units that you set free to completely rethink a whole service area.
You can also implement the philosophy of the lean startup within your whole organization. In his book ”The Lean Startup” Eric Ries argued that the principles of entrepreneurial management, a startup mindset, could be applied to any industry, size of company, or sector of the economy. The startup mindset is what is needed to create new services under conditions of extreme uncertainty. Giant corporations have already successfully started implementing this. For example a company founded in 1892 with a gross revenue of over $119bn in 2016. General Electric is bigger than the whole social and health care sector of Finland. If they can do it, so can we. This kind of mindset needs to be implemented not only in companies and organizations but on a national level as well.
In a broader sense, leadership from the perspective of governmental control is also a challenge, especially in terms of regulation and funding mechanisms.
Our industry is highly regulated. The taxi industry is a crude example of how this hinders development. Laws and regulation of the taxi industry have gone quite far into regulating not only outcomes but also the implementation. Strictly regulating who, what and how doesn’t leave room for appropriate development efforts.
There are risks in this area in our industry too. Legislation is quite heavily being used to force implementation and to ensure sufficient quality of care where more appropriate means – incentives and leadership – would probably lead to better outcomes. For example, setting minimum levels for the amount of nurses per resident in a nursing home is a pretty crude way of ensuring quality of care.
Regulation has brought along certification needs, which have caused some unnecessarily high barriers to entry. As just one example, joining the Kanta-services requires easily over 6 months of work and 100k euros.
Funding is fragmented, and structures of the funding mechanisms have slowed the development of digital services. One example of this was how the development of telehealth was slowed as the Social Insurance Institution of Finland did not reimburse remote appointments. Thankfully the multichannel funding system is now being simplified.
On this issue of state control and national development initiatives, I’ve been pondering that creating a centralized, national entity is not exactly the text book solution for spurring innovation and furthering digital transformation. Of course, it all depends on the details of implementation.
As a tiny nation of 5 million we need more co-operation
Digital transformation would benefit from increased cooperation. As we know Napster, Uber and similar lone rangers in other industries have been able disrupt and transform an entire industry on their own, but the sheer size and complexity of the social and healthcare industry calls for more cooperation.
We are a tiny nation of 5 million, do we really need the conflicts, be it between ministries or between public and private providers? With the evergrowing demand, there is surely plenty of work for everyone. Instead of competition and conflicts we need to cooperate in developing an ecosystem to enable better interoperability of services.
In this undertaking we should also more boldly involve technology and software providers. Brief them on the problem at hand and have them work with you to solve it. Also, not everything needs to be built from scratch.
Above all, cooperation on national development is crucial. The building of national infrastructure such as the Kanta patient data repository has taken over 10 years. The road hasn’t been easy and I can see that one might feel like giving up hope. But we are on the homestretch, this is not the time to call it quits. The transfer of patient and social services data is not a problem any more. (A bit of a simplification, but true enough.) What we need is a bit more patience to be able to utilize the data that has now been made available. This won’t really be fixed by new technology and with our tiny resources as a nation we really can’t afford building new parallel solutions for this.
There is no fast track to effectiveness. True horizontal and vertical integration cannot be built on regulation alone. It needs interoperability work on every level – from political objectives and strategic incentives – through aligned operations and data models – to technical protocols.
Technology and software are not always the culprits. Be sure to clearly define the development need!
It’s interesting to note that technology and software is often the scapegoat, even though the aforementioned are much more critical – lack of incentives, too much control, and too little cooperation.
It’s crucial to always stop to define what it is precisely that we are trying to fix here – lack of technology is not always the problem. Too often we see organizations dive into specifying technical details instead of properly defining the development need. One good example of this from the past was video technology to enable doctor’s visits from home. Many were trying to simply digitize the conventional doctor’s appointment whilst the real issue was how to provide easier and faster help to patients while at the same time scaling the use of the limited resources of doctors. It turned out that traditional instant messaging services were a much better solution than real-time video.
Defining the need in a fast changing environment is not easy. It has been estimated that a third of IT-projects can be labeled as failures. Sadly, often the technology works, but the project is unable to deliver the required value as the business objectives and priorities have changed along the way.
Monolithic legacy software doesn’t exactly spur digital transformation
Of course, it’s also true that monolithic legacy software and systems don’t exactly help in implementing a digital transformation. Legacy software has slowly grown to enormous size and lacks the interfaces and technology to be able to be changed or updated in parts. Innovation is hindered by lack of competition and huge cost of replacement.
Thankfully it seems that we are now at a turning point. The regulatory requirements and operational model changes brought about by the social and healthcare reform will in effect force organizations to renew their electronic medical record systems. Private sector EMRs have been optimized for payment handling but aren’t cut out to support the new health and social services centers. Public sector EMRs on the other hand don’t provide enough support for integrated care across the field – patients’ self-care, primary health care, social care as well as hospitals and specialized care.
It will be quite interesting to see what kind of systems will be procured. Here again, the problem is not so much that we need better EMRs but instead, that we need smarter systems to support operations management, enterprise resource planning and development. And here too, cooperation would be beneficial. Some of these systems could easily be procured in cooperation, thus attracting more IT-provider competition to the field.
In the end, we are still sitting on a gold mine
But it’s not looking all that bad in terms of getting digital health to take off in Finland. The European Health Telematics Association wrote in their review in 2013 ”Finland is sitting on a metaphorical gold mine”. This is still true. Actually even more so, as today we have enablers like the national genomic strategy and the forthcoming implementations, legislation regarding the secondary use of the social and healthcare data, and the reform of horizontal and vertical integration of social and healthcare.
There are just a few areas for improvement in order for digital health to really take off. We need:
- the national reform to work towards a better incentivized ecosystem of innovation. Undoubtedly this will take time and a lot of subsequent development.
- to be careful not to overregulate. It’s safer to guide wisely and monitor effectively.
- to foster a lean startup mentality and to think bigger. This, I presume, will be a long road. It’s something that has to be started even though we can’t be certain of where we are going or how exactly to get there. All we know is that sticking with the mentality, models and principles of today will inevitably make you a part of the 70-80% estimated to fail.
- more cooperation between providers and other key stakeholders as well as on a national level.
Let’s work together to build success!